In recent years, meme stocks have emerged as a new phenomena in the stock market.
These stocks are driven not by traditional valuation metrics or financial fundamentals, but by social media hype and online communities.
In this article, we’ll take a look at the history of meme stocks, the GameStop saga, and the 5 best meme stocks to watch for 2023.
What are Meme Stocks?
Meme stocks are stocks that become popular on social media platforms like Reddit and Twitter, often through the use of memes.
These stocks are not necessarily backed by strong financial fundamentals or earnings potential. Rather, they are driven by online communities that are looking to make a quick profit or send a message to often manipulative hedge fund titans.
The term “meme stock” was first coined during the GameStop saga in mid 2020.
It came about when a group of retail investors on Reddit’s WallStreetBets forum banded together to drive up the price of GameStop’s stock.
The group saw an opportunity to squeeze out short-sellers who were betting against the struggling video game retailer.
Their coordinated efforts resulted in a massive short squeeze that sent GameStop’s stock soaring.
Since then, other stocks have become popular among the meme stock crowd, including AMC Entertainment, BlackBerry, and Tesla.
These stocks are often subject to extreme volatility and can be difficult to predict based on traditional market analysis.
The GameStop Saga
The GameStop saga began in late 2020, when a group of retail investors on Reddit’s WallStreetBets forum noticed that it had been heavily shorted by hedge funds.
At the time, more than 150% of the company’s float was short. A float refers to the number of shares a company has issued that is available for investors.
Often referred to as “the little guys,” they saw an opportunity to take on the Wall Street establishment and make some money in the process.
The investors began buying up shares of GameStop in large quantities, driving up the price and triggering a short squeeze. Short-sellers who had bet against the stock were forced to buy shares in order to cover their positions, sending the price even higher.
As the frenzy around GameStop grew, it captured the attention of the mainstream media and politicians. The stock reached a high of $347.51 in late January 2021, up from just $18.84 at the beginning of the year.
The GameStop saga ultimately ended with the stock price crashing back down to earth, leaving many investors holding the bag.
However, the episode highlighted the power of social media. It also gave light to retail investors potential to upend traditional power structures in the stock market.
Below, we will present the 5 Best Meme Stocks to Watch in 2023!
5 Best Meme Stocks to Watch for 2023
1. Tesla (NASDAQ: TSLA)
- Ticker: ATVI
- Dividend Yield: N/A
- Market Cap: $59.69 Billion
Tesla is a well-known company that has been a favourite of meme stock investors for several years now.
The company is led by Elon Musk, who has become somewhat of a cult figure in the investing world.
Tesla’s stock price has been on a rollercoaster ride in recent years, with significant price surges followed by sharp drops.
However, despite the volatility, many investors remain bullish on Tesla’s long-term prospects.
Tesla has an ambitious goal of transitioning the world to electric vehicles, and the company is investing heavily in research and development for large scale megapack energy storage systems.
2. GameStop (NYSE: GME)
- Ticker: GME
- Dividend Yield: N/A
- Market Cap: $5.59 Billion
GameStop became one of the most well-known meme stocks in early 2021, when a group of retail investors on Reddit’s WallStreetBets forum banded together to drive up the stock price.
The stock’s price surged from less than $20 at the beginning of the year to over $300 in just a few weeks.
While the hype has died down since then, GameStop remains a popular meme stock to watch.
The company is undergoing a turnaround under new leadership, and there is optimism about the future growth prospects of the business.
3. AMC Entertainment (NYSE: AMC)
- Ticker: AMC
- Dividend Yield: N/A
- Market Cap: $4.38 Billion
AMC Entertainment is another stock that gained notoriety in early 2021 due to the WallStreetBets phenomenon.
The stock price surged from less than $3 to over $70 in just a few months.
Like GameStop, the hype around AMC has died down since 2021, but the company remains a popular meme stock on wall street.
The movie theater industry has been hit hard by the pandemic, and might never return to pre-pandemic levels.
Thus, making the company extremely speculative and risky. Evidently, this alone might be enough to get meme stock investors interested.
4. Robinhood (NASDAQ: HOOD)
- Ticker: HOOD
- Dividend Yield: N/A
- Market Cap: $7.59 Billion
Robinhood is a stock trading app that has become incredibly popular in recent years, particularly among younger investors.
The company went public in July 2021, and its stock price is down 75.92% all time.
Robinhood has faced criticism for its business practices, particularly during the GameStop frenzy in early 2021.
However, the company remains popular among retail investors, and there is optimism about its future profitability.
5. Palantir (NYSE: PLTR)
- Ticker: PLTR
- Dividend Yield: N/A
- Market Cap: $16.06 Billion
Palantir Technologies has become a popular meme stock among retail investors, thanks in part to its association with co-founder Peter Thiel, a prominent figure in Silicon Valley.
The company’s stock price has been volatile in recent months, with significant price swings driven by social media hype.
Despite the volatility, there is optimism about Palantir’s long-term growth prospects, thanks to the company’s focus on data analytics and artificial intelligence.
Moreover, PalaNtir just had its first profitable quarter as a public company in Q4 2022. They saw total revenue up 18% year-over-year with diluted EPS of 0.02 and net income of $31 million.
As governments and businesses continue to invest in data analysis, Palantir is well-positioned to capitalize on this trend.
Meme Stocks: Final Takeaway
Meme stocks have become a new phenomena in the stock market, driven by social media hype and online communities.
The GameStop saga in early 2021 highlighted the power of retail investors to upend traditional power structures in the stock market, and since then, other stocks have become popular among the meme stock crowd.
The 5 best meme stocks to watch in 2023 include Tesla, GameStop, AMC Entertainment, Robinhood, and Palantir.
However, it’s important to remember that investing in meme stocks can be unpredictable and extremely risky. Therefore, it’s always wise to do your own research and proceed with caution.
Disclosure: The author holds no position mentioned in this article. Freedom Stocks has a disclosure policy.
